CNOOC starts drilling offshore Myanmar

CNOOC starts drilling offshore Myanmar

Shanghai: China National Offshore Oil Corporation (CNOOC) has announced that its flagship deepsea oil rig HYSY No.981 has started drilling offshore Myanmar in the Andaman Sea. CNOOC said the well offshore Myanmar is targeting a depth of 5,000 metres, and will be the deepest exploration well it has undertaken so far.

CMES to dispose of eight vessels

CMES to dispose of eight vesselsShanghai: China Merchants Engery Shipping (CMES), the state run energy shipping giant, has announced that it has decided to dispose of two old aframax tankers and six aging bulkers from its subsidiary Youhua Shipping, as part of its...

Guangzhou to bolster shipping exchange

Guangzhou to bolster shipping exchange Guangzhou: Guangzhou city government has approved a proposal by Guangzhou Port Authority to set up a shipping exchange company in an effort to expand the Guangzhou Shipping Exchange (GSE). GSE plans to gradually set up several jo...

Ningbo subsidies on offer

Ningbo subsidies on offerShanghai: Ningbo Transport Authority has released a new subsidy policy for the rail-sea intermodal service. According to the policy, the government will offer subsidies to shipping companies and train operators that operate rail-...

Shagang Shipping files for liquidation

Shagang Shipping files for liquidationHong Kong: Dry bulk operator Shagang Shipping has filed for liquidation with a Hong Kong court, adding to the recent wave of bankruptcies of dry bulk shipping firms. Shagang Shipping joins three dry bulk shipping companies that h...

Authority investigates Cosco and CSIC

Authority investigates Cosco and CSICShanghai: The central government’s anti-corruption sweep on state-run companies continues. Following investigations into China State Shipbuilding Corporation (CSSC), China Shipping Group and energy giant PetroChina, the investigat...

Guangzhou Shipyard International relocation delayed

Guangzhou Shipyard International relocation delayedGuangzhou: Guangzhou Shipyard International (GSI)’s relocation plan has been delayed. The shipyard scheduled to relocate its main shipbuilding base to affiliated Longxue Shipyard before 2015. However, the shipyard is still operati...

Heihua Group to acquire shipping assets of Renjian

Heihua Group to acquire shipping assets of RenjianDalian: Shanghai-listed Heihua Group, a major chemical enterprise in Heilongjiang province, has announced a major restructuring plan involving Renjian Group, a major shipping group in Fujian province. The company has suspended stock...

Franbo boss reckons rates have bottomed out

Franbo boss reckons rates have bottomed outTaipei: The chairman of quickly evolving Franbo Lines from Taiwan has told our sister site, Maritime CEO, that dry bulk rates have bottomed out and there will be opportunities for nimble operators this year. Pang-Chuan Tsai, Fran...

Wisdom Marine to raise $80m via offshore bond issue

Wisdom Marine to raise $80m via offshore bond issueTaipei: Taipei-listed bulker operator Wisdom Marine has announced that it plans to raise $80m through an overseas bond issue. The raised funds will be used for fleet expansion. J.P. Morgan Securities will be the overseas underwri...

Tianjin Marine diversifies

Tianjin Marine diversifies Dalian: Tianjin Marine has announced that it has signed an agreement with Bank of China. Under the agreement, Tianjin Marine will use RMB2.8bn ($447.7m) from the raised fund to invest in low-risk bank products with an annual ROI of ...

UN targets North Korean firm

Dalian: A North Korean shipping company is violating sanctions by renaming most of its vessels, according to a study by the United Nations. Ocean Maritime Management Company (OMM) was blacklisted last July following the seizure of the 1977-built C...

TIPC maps 2015 development

Taipei: Taiwan International Ports Corporation is to actively cooperate with Southeast Asian countries and set up new container companies this year to boost its shipping business. The island is planning to set up Kaohsiung Continental Container Comp...

Hansa Heavy Lift expands presence in China

Shanghai: Hansa Heavy Lift has announced that it has opened a new representative office in Shanghai as part of an ongoing push to grow its Asian footprint. The new office will be headed by Shi Wenhe.

Baosource orders two

Dalian: Korean shipbuilding news site, Asiasis, reports that Baosource Shipping, a Shanghai firm, has ordered a pair of small bulkers. The 100 m long, 6,600 dwt ships will be built by Huahai Heavy Industry and will be operated on domestic trades.

Wisdom back in Japan for another bulker

Taipei: Fast expanding dry bulk operator Wisdom Marine is spending $22m on another Japanese bulker. The Taiwanese line has opted for a 37,000 dwt design at Onomichi Dockyard.

China’s changing tanker patterns

London: UK broker Gibson has filed a report on the changing nature of Chinese tanker trades with a greater willingness for Chinese tanker owners to trade more internationally. Currently the number of VLCCs on order from Chinese controlled companies...

China’s LNG terminals underutilised

Shanghai: Despite all the bluster surrounding China’s LNG demand, a study by Russian newswire Interfax shows that China used just over half its LNG regasification capacity in 2014, as tariff hikes and cheaper competing fuels hit gas demand growth.

Sri Lankan PM vows to solve Chinese port riddle

Colombo: The new Sri Lankan government has tried to make China’s port construction plans more clear. Following last month’s elections, China’s bid to build a new port in the capital has come under scrutiny.

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Winter 2014
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In Focus

Cheaper oil puts brakes on OSVs

Kohe Hasan from law firm Oon & Bazul on the offshore outlook for 2015

Cheaper oil puts brakes on OSVs

The offshore supply vessel (OSV) industry has seen significant growth in recent years. However, the steep fall in oil prices of late could put a spanner in the works for the OSV industry.

At present, global oil prices are in the middle of one of its steepest selloffs since the financial crisis of 2008/2009.  World oil prices, which were hovering in the region of $110 per barrel from January 2010 until mid-2014, have taken a nose dive since June, more than halving in the past six months.

Whilst the decline in oil prices is likely to be a boon for consumers, the same cannot be said for the OSV industry. This is because oil majors are likely to cancel or delay their drilling operations and big-ticket production projects which are predicated on high oil prices. Evidence of this can already be seen in the recent announcement by ConocoPhillips that it would be cutting investment spending in 2015 by 20%.

The potential reduction in drilling operations and production projects would be of particular significance to OSV operators (both owners and charterers). This is so as drilling operations are a key driver in the demand for the use of OSVs such as platform supply and anchor handling tug vessels. OSV operators are therefore expected to experience a fall in the demand for OSVs.

One possible repercussion of the fall in the prices of oil and the expected fall in demand for OSVs is that charterers may seek to discharge themselves from charterparties which they had concluded prior to this decline. Such a trend was seen from the collapse of the freight market in 2008 which saw many charterers in the dry bulk industry attempt to discharge themselves from unprofitable charters. Similarly, this trend is likely to be seen in the context of the OSV industry as charterers would find that their charterparties have become significantly less profitable if the OSVs are unutilised as a result of the fall in demand. The need to discharge  ...   More>>